Frank commentary from an unretired call girl

Perverse Incentives

Nothing is so permanent as a temporary government program. – Milton Friedman

Sometimes, I set out to write an essay and soon discover that it has turned into something quite different from what I intended, or at the very least grown to embrace much larger issues than the one with which I began. Obviously, I’m not privy to the inner workings of other writers’ minds, but every so often I see an article which seems to have grown in that way. Radley Balko’s “James Buchanan, RIP” was such a piece; though its title and opening indicate that it began as an obituary of the Nobel laureate, it contains so much more that I think even those whose eyes glaze over at the mere mention of economics may find it worth their time. Balko begins with a quote from the New York Times obituary explaining Buchanan’s importance:

Dr. Buchanan…was a leading proponent of public choice theory, which assumes that politicians and government officials, like everyone else, are motivated by self-interest — getting re-elected or gaining more power — and do not necessarily act in the public interest. He argued that their actions could be analyzed, and even predicted, by applying the tools of economics to political science in ways that yield insights into the tendencies of governments to grow, increase spending, borrow money, run large deficits and let regulations proliferate…

He then continues by pointing out that though “conservatives” have used Buchanan’s work to attack the kind of “progressive” bureaucracy they claim to oppose, they ignore the fact that it also casts unwelcome light on the big-government programs they favor:

…When a new federal agency is created to address some social ill…there’s a strong incentive for [its] employees…to never completely solve the problem…[because] there would no longer be a need for their agency…In fact, there’s a strong incentive to exaggerate the problem, if not even exacerbate it…But when it comes to law enforcement, [conservatives]…have the same sort of blind faith in the good intentions and public-mindedness of public servants that the left has for, say, EPA bureaucrats…you could make a strong argument that it’s more important that we recognize and compensate for the incentive problems among cops and prosecutors because the consequences of bad decisions can be quite a bit more dire. If we reward prosecutors who rack up convictions with reelection, higher office, and high-paying jobs at white-shoe law firms, and…provide no real sanction or punishment when they break the rules in pursuit of those convictions, we shouldn’t be surprised if we start to see a significant number of wrongful convictions. If we reward cops who rack up impressive raw arrest numbers with promotions and pay raises, and…don’t punish or sanction cops who violate the civil and constitutional rights of the people…we shouldn’t be surprised if we start to see a significant number of cops more interested in detaining and arresting people than in protecting the rights of…citizens…

I hope all of you immediately thought of “trafficking” propagandists upon reading the words “strong incentive to exaggerate the problem”; if not, I’m failing at my job. They, and all those who promote any extreme and one-dimensional view of reality, must exaggerate not only their raison d’être, but also the differences between themselves and rivals. Furthermore, they must deride those who are skeptical of their dogma; one popular means of doing so is by equation of skeptics with some demonized group. Prohibitionists often brand supporters of sex worker rights as “pimps” or “trafficking apologists”, social conservatives tar their critics with such epithets as “communist”, and collectivists try to equate those who advocate for liberty with others whose motivations might be considered less noble by those of “liberal” bent:

Libertarians are often derided for being unapologetically selfish. I don’t think that’s a fair criticism of libertarian thinking. It is a fair criticism of Randianism/Objectivism…Libertarianism is a philosophy of governing, and only of governing…the difference…is best explained this way: Randianism is a celebration of self-interest. Libertarianism is merely the recognition of it…

Balko further points out, as I often do, that it’s a mistake to pretend that governments are intrinsically different from all other groups of humans, for good or ill; every group will seek to further its own ends at everyone else’s expense, and the only way to stop it is to stop letting people – any people – have so much power over one another. A few examples:

The idea…is not that public employees are terrible, selfish, horrible people…It’s that they’re merely human, like the rest of us…Mothers Against Drunk Driving was enormously successful at attaching a social stigma to drunk driving…DWI deaths plummeted, until about the late 1990s…then the numbers began to level off…rather than declare victory, MADD expanded its mission, and began taking on underage drinking, happy hour specials, alcohol advertising, and other booze-related issues…the organization’s founder eventually came around to say that MADD had outlived its original mission, and become merely an anti-alcohol group.

One more example: private prisons and prison guard unions. Free market types who normally believe in the power of incentives for some reason think corporations that operate prisons will somehow resist the incentive to lobby for laws that will create more prisoners, even though more prisoners means a better bottom line for the prison company. That hasn’t happened. At the same time, progressives seem to think that some sense of solidarity with the greater, pro-union progressive cause will prevent prison guard unions from also lobbying for laws that create more prisoners, even though more prisoners means more prison guards, which means more dues-paying members of the union. That hasn’t happened, either...in the aggregate, it’s generally wise to be skeptical of large organizations claiming to speak on behalf of large groups of people, and especially of those who claim to be acting in the public good. It’s a safe assumption that the primary objective of MADD is the preservation of MADD, that the primary objective of the NRA is to preserve the NRA…The policies that best serve teachers’ unions are not necessarily the policies that are in the best interest of teachers. The best interests of students are (at least) another step removed. The policies that are in the best interests of police unions aren’t always the policies that are in the best interests of police officers, and certainly aren’t always the policies that are in the best interests of public safety (never mind civil liberties)…

I think you get the picture. If you have time, read the entire original; Balko is a powerful and effective writer, and so sensible that the loony HuffPo commentariat eventually recognized that attacking him only made them look stupid. And while you’re driving today (or waiting for a computer or employee to finish a task, or taking a shower, or anything else that gives you the opportunity to ponder for a few minutes) consider how well public choice theory describes the observable behavior of governments, feminists, the rescue industry, religions, political parties, and any other large group, and ask yourself if it’s really all that different from the observable behavior of corporations. And if you wouldn’t trust big business to control your life, happiness and property, why on Earth would you trust any of those others either?

63 Responses

Thanks for finally hearing this from someone else! I’ve been saying for years that politicians first duty is to their own asses, second to the party, and so on. Duty to their voters (i.e. getting reelected) comes in around five and duty to the public good (if such a thing exists) doesn’t even make the list.

But, oh, no, politicians chose their profession out of a care for the public good! Sure, and how’s the weather on your planet?

Those two paragraphs aren’t the contradiction that you think they are.

They might have had a care for the public good. Once. At the time they entered the profession. But if they don’t come to believe that “I can’t serve the public good unless I get re-elected, so I have to prioritise my re-election over doing the right thing”, then they don’t get re-elected to a city council, and never get anywhere near a state legislature, much less congress.

We – all democracies I know of – have created a system where prioritising what you believe to be right over what you can convince your voters to agree will doom any politician.

THANK you. I’ve said ’till I’m blue in the face (OK the fingers) that politics attract the best and worst society has to offer: those wanting to serve the people/public good, the already corrupted, those seeking further corruption, and those who start out good but, for various reasons, go bad. Sometimes it’s the desire to stay in the game long enough to do some good, the idea that “well, I can do this one bad thing if it gives me a chance to do several good things.” But this can be a death spiral for one’s ethics, because how much bad are you willing to do, to achieve how much good?

And of course there are those who go into politics for the money and power — the already corrupted, the pre-corrupted.

The assumption that nobody ever has good motives may be fashionable cynical, but has little value otherwise.

It doesn’t tell us what to do about it. It doesn’t tell us how to align the self-interest of politicians with the self-interest of the people. Also, please tell me his Nobel Prize was for something other than pointing out that people are more likely to work for their own self-interest than to work against it. We already knew that.

I’m always skeptical about these theories which act as if people are molecules. Foundation was science fiction, and remains so. Yeah, you can do some, but this isn’t chemistry or physics.

Man, this essay is AWESOME! It perfectly connects all the dots and illustrates the problem with government – and with the Conservative cause.

Disclaimer – I feel a hell of lot more “commonality” with Conservatives than I do Liberals. I did not vote for Reagan … I voted for John Anderson in 1980 and he was a big government Republican who ran third party that year. That was fitting, since Eugene V. Debs was my hero at the time and I was stalwart Socialist. However, Reagan really got me thinking when he made the remark in his inaugural … “In this present crisis, government is not the solution to our problem; government is the problem.”

The problem with Conservatives is that they bitch about Mayor Bloomberg banning “supersized” portions of anything. They complain about gun control. Then they turn around and insist on using those same governmental prohibitionist mechanisms to enforce the war on drugs and the war on whores. And then they scratch their heads and wonder why all the “busy bodies” have so much power over their lives.

What excites me about these times (amongst all the things that depress me) … is that a lot of Conservatives are taking a long hard look at what they believe in and they’re starting to question prohibitionist government. Consider that George Will now is even questioning the war on drugs. Conservatives are not all the way there by a long shot – but I really do think there’s a realignment going on – or at least I hope so. I have NO HOPE for the Liberals because, by definition – you have to believe that government is THE solution if you’re a liberal.

I think we will see a major third party soon and God – I just hope that it’s more libertarian.

I’d certainly love to see the two-way split (if we HAVE TO have such) in American politics be between Libertarians and Liberals, instead of Republicans trying to pretend that they’re conservative in every way* and Democrats trying to prove that no, we’re really not liberal at all.**

But that’s easy for me to say, because I agree with Libertarians on about half of what makes them Libertarians: stop bothering me about what I read, watch, listen to, who I have sex with, how, who to, and whether I pray, and what I put in my body. I disagree about the size of government being the shibboleth for every moral (or rationally self-interested) person, or about cutting off programs which help people whether or not they are “moral” people.
So I’d be happier with some Liberals in the mix to maintain Social Security, build some fast trains, and keep raw sewage out of the drinking water. We can argue over what and how much, and well that’s what we’re supposed to do in a country where even some of the power resides in the people.

But think of it: two parties agreed that we must end the War on Drugs once and for all, agreeing that prostitution is a personal choice, preferring to avoid war (even if for somewhat different reasons), and arguing over fast trains and Medicare. OK, it isn’t Utopia, but it’s a lot better than what’s going on now.

* With different varieties of conservatism at odds with each other, i.e., less government power vs. a government powerful enough to MAKE people stop smoking pot.

** Which means they keep trying to spend a lot of money on Medicare but support the War on Drugs to show that they aren’t immoral.

That essay instantly became a favorite when I read it. The particular factoid about MADD struck home as, at the same time as the essay was making the rounds representatives from the organization were on a local radio show advocating universals breathalyzer locks on cars – a huge privacy/regulatory infringement. Their justification? A 1.5% uptick in DUIs after a 50% decline over the past two decades. It was such a total lack of perspective, I couldn’t accept they were acting in the public interest in earnest.

Regarding MADD and how “MAD” they drove the national discussion on drunk driving …

I had a young Sailor who was three days from his 21st birthday. Admiral had a Superbowl party and there was beer there – and no one got drunk. Had I noticed this Sailor drinking a beer, I would have stopped him immediately. I wasn’t looking good enough that day – I felt relaxed, and I forgot my duty as a Master Chief to make sure kids stay out of trouble.

Driving home – he had to stop for gas. A policeman approached him while pumping the gas and next thing he knows – he’s puffing a breathalyzer. He didn’t blow anywhere close to intoxication – but because the state had a “zero tolerance” law ( which had been lobbyed for by MADD) he was issued a DUI for having a slight detectable amount of alcohol in his blood system.

Now, I have never forgiven myself for not watching more closely at the party. However, the whole “zero tolerance” law that MADD pushed on the state was inexcusable and further – the cop who charged this kid for underage drinking for a barely detectable amount of alcohol three days before his 21st birthday was an absolute DICK.

That pretty much ruined a good Sailor’s career. I had to cancel his orders because he was selected to become a Navy SEAL and you have to have – at least – a secret clearance for that duty. With his underage drinking – he could never get a clearance like that.

krulac,
Similar story, my younger brother’s friend was hit in a similar fashion. He’d been sick and had been taking Nyquil but had missed enough school that he was at risk of losing the semester. So he bucks up, heads to school, stops to fill up on the way there and since he looks like death warmed over, the local cop just had to give him shit.Does the same thing, he blows well below the limit. But the cop nicks him on an underage drinking rap. And the judge made him plead out instead of kicking the cops ass up around his ears like he should have.

Oh, and the semester? He was out two days because he was in jail for one of them and had had a relapse of his symptoms.

Unless somebody can convince me that it take less alcohol to impair the driving of somebody twenty-and-a-half years old than it takes to impair the driving of somebody twenty-one years old, I just can’t support these lower limits, much less “zero tolerance” (which in every case of which I am aware translates as “zero brains”).

As applied to trafficking activists, I think it is very true that they will never say that the problem is solved. It’s not just the money that motivates them; it’s the adulation and sense of superiority. Kristoff will have a reporting job no matter what. But reporting on trafficking, even if the problem doesn’t exist, makes him a “hero”.

How do we curb these public and private organizations when they reach the tipping point?

Military spending is out of control by an order of magnitude, but we can’t abolish them completely. EPA is crazy red tape, but I grew up in an oil and mining family and we don’t want to go back to my grandparents childhood of oil slick in the water glass.

So the essay left me feeling hollow. Good articulation of the problem, but now what?

Maybe start with full abolition of large things that no longer serve any purpose (madd, vice squad, tsa, goldman sachs) but its a pretty short list relative to the problem.

That’s precisely what I was thinking as I read this. We know what the problem is, but the $64 question is how do we counteract that corrupting effect? Is there even a way to do it, or do we just bide our time until the collapse and bloodletting start?

On the federal governmental side of things, I think that term limits for senators and representatives would go a long way. The first thing that would happen is that people who want to wield power for their entire lives would have to find something else to do, so a lot of the pre-corrupted wouldn’t even run. Those who really do want to Do Good Things would only have to fight the One Ring for a portion of their lives, not for the rest of their lives.

I’d suggest two terms for the Senate, and nine for the House. This way, a senator can serve for one and a half times as long as a president can, and a representative can serve for one and a half times as long as a senator can. Even somebody who became a representative for nine terms, a senator for two terms, and president for two terms would only be able to be an elected national official for thirty-eight years, and most would be in Washington for a lot less.
I could be talked into different numbers.

I like the idea but I’d like to throw another one into the pot. As “Yes Minister” series from the UK does an excellent job demonstrating, the real continuity of power lies within the bureaucracy. Throw in a 15 yr limit of total gov’t service in all branches, and I think the effects would be more democratic. And none of these folks get a pension unless they provide for it on their own, just like the rest of us have to. They get the same social security, the same medicare, as the pplebians, and that’s it.

I think I could go for that. Absolutely restrict how long they can head up any one department, and a limit on total service… idk. There are a lot of career soldiers and such.

But yeah, we don’t want to make bureaucrats even more powerful in relation to the folks we actually get to vote out if they turn out to be rats before their term limits kick in.

This sort of thing becomes more important as people live longer, healthier lives. Nobody should a senator or the head of the FBI for eighty years. Or, for that matter, a Supreme Court Justice. We’re going to have to replace life-long tenure with a (suitably long) term limit. Maybe fifty years?

Yes, the same Social Security and pension plans as the rest of us, OR provide the rest of us with what they get.

There’s a much better way already in place in some of the armed forces (though it would obviously need to be perfected & monitored by outside agencies); it’s called “up or out”. Promotion is strictly based on merit, and anyone who is passed over for promotion three times is immediately fired without hope of appeal. In elective office, if a politician loses three elections for a higher office he’s kicked out of the one he has.

Our representatives only care when we care; this is the corollary of the statement, “People get the government they deserve.” They serve the public if it is in their best interest, the big problem with America’s current system is that there are periods of time that are too long between elections for the modern era, and the parties can manipulate (gerrymander) legislative districts. The entrenche nature of a the two party system doesn’t help, neither does the small size of the House of Representatives for the population.
I suspect proportional representation in a 1000 member parliamentary Lower House (given that had 1.4 million more votes in the Congressional elections than the GOP, only Gerrymandering prevented the Dems from taking the House) would be 60 Socialist, 90 Green, 300 FDR Democrats, 100 Clinton/Obama Democrats, 100 Eisenhower GOP, 200 Reagan GOP, 100 Libertarians, and 50 Tea Party/Know-Nothings. This is just a guess.
Remember–Democracy is not a spectator sport.

Thanks Sailor.
But I really feel that we need a larger House of Representatives, who spend more time legislating and less–or even zero–fund raising. I also think the Senate needs to be expanded to 3 members per state, with every state electing a different Senator every 2 years. Get rid of the Electoral College, and the two party stranglehold on American politics, and create a system of proportional representation as every other western Democracy has. Maybe elect half the house one year, and the other half the next. Hell, I don’t know, I’m just throwing out ideas to see if any stick.

I don’t know about a larger House or Senate, but yeah, I’d sure love to get rid of all the time they, and presidential candidates, send fund raising. I’ll have to think over the larger House idea, look at the history a bit, that sort of thing.

The kiss would have been (mostly) for pointing out that not only do the American people get the government we deserve, but that we deserve the government we get.

I think that was inherent in my earlier comments. But I would also note that the last time we really had any sort of multi-party system at all was immediately after the increase in the size of the house to its current 435 member level. We had Socialists running Milwaukee (if I remember correctly), Bull-Moose progressives in several governorships, and Bob LaFollette was the Senator from Wisconsin. The two major parties cannot easily fill 600 additional seats around the country, and will have to dip into their “maverick” contingent to even make any sort of real attempt. But you are correct: we desperately need proportional representation, facilitated through instant run-off voting, now.

My brother in pursuing his economics doctorate had a class with Buchanan. (I think it was a multi-week seminar.) Even though Buchanan was in his 70’s by then, my brother said his was the most incisive mind he’d ever met. He just wished that he’d been able to meet him in his prime.

I was privileged to hear Buchanan speak at a local university about 5 years ago – a local real estate tycoon had endowed a series of speakers at the local university on topics of politics, economics and government that was free to the public.

In the Q&A following, one of the university students challenged him on his assertion that the US political system was far more corrupt today than it was a century ago. He brought up Tammany Hall and the KCMO machine, and Boston, etc., and asked how Buchanan could possibly compare the blatant corruption of those historic times with the present.

I remember scribbling down his response which probably still resides in my many stacks of paper still packed from the move, but, as near as I can recollect, it was this;

“My dear young man, the essence of political corruption is the exchange of money for political favor, usually at the expense of those who are not so connected. What is our present system of lobbying and electioneering but precisely that? Lobbyists promise varying means of electoral support in exchange for favorable consideration of their legislative agendas to benefit themselves and adversely impact their adversaries. This is the inevitable outcome of lodging so much power in government; it is inescapable that such concentrations of power will breed such behavior in the electorate. But it is so ubiquitous that, like fish in water, we no longer discern it and so look back at historical instances, like Tammany Hall, which were the exception rather than the rule, and think that they represent a more corrupt period than our own.”

I remember thinking that he was correct and that I had had the same mindset. His answer certainly cleared up that misconception.

Now he didn’t address this particular issue, but it is something that I think is related. Of course the local machines had their connections to organized crime and access to their “muscle” if the thugs didn’t work for them directly. And present day lobbyists don’t sport that kind of muscle, so the direct comparison is flawed…

Except that they do sport that kind of muscle at one remove. When you have SWAT teams closing down raw milk producers – including the Amish, of all folks, or raiding natural food stores on behalf of the USDA, or free range cattle operations (as opposed to CAFE operations) what are these but the use of physical force on behalf of interested (and connected) parties and against their rivals? When the FDA stands behind cease and desist orders sent out to intimidate drug manufacturers, now the erstwhile rivals to the new monopolists they’ve just bestowed “orphan drug” status on, what is this but the governmental equivalent of, “nice shop ya got here – be a real shame if anything happened to it.”

In short, I think that Buchanan’s point is even more applicable to evaluating the extent and severity of corruption in government than just the point of it being universal. And I think it adds a bit more scope to Radley Balko’s herculean work to expose the basis behind the militarizing of our police – particularly the use of “assault style” search warrants in order to “send a message.” Unless the cop apologists are really going to argue that sending armed SWAT into an Amish dairy is an appropriate used of government force.

Here’s a link to similar actions taken against organic food cooperatives. Please note that my linking to this article is not an endorsement of any of their policies or positions, just a source of information regarding these abuses.

The problem with Balko, as with all of libertarianism, is that they overestimate the effectiveness of competition in a free market at countering at the problems they identify.

They have a lot of good points, but they share them with many other political philosophies. Notably The idea that libertarianism is merely the recognition of self-interest is utterly laughable, they may have a better understanding of it than say, communism, but can hardly to be the only ones to realize a person is often the one best suited to safeguarding their own well-being.

Even a cursory review of the kinds of policies typically associated with liberalism (which, at this point is a rather ironic title) suggests that members of that particular political philosophy have, if anything, one of the weakest grasps on the concepts of incentives and self-interest. Policies such as minimum wage laws, rent control, workplace safety regulations, etc, etc, etc all fundamentally ignore the notion of self-interest.

Yet, a cursory review of libertarian policies like market deregulation and decentralizing currency suggests that members of that particular political philosophy have an extremely weak grasp of the nature of self-interest.

I would suggest reading the correspondence of Thomas Jefferson, who excoriated the idea of self-interest as a proper motivation for any human being to live by. I don’t have my thumb drive with my Jefferson quotes on me at the library today, but I think you will find the 1816 letter to John Taylor of special interest. I’ll make certain to bring my thumb drive with me tomorrow.

As to the soi disant freemarket, there is no such animal, as Adam Smith pointed out in The Wealth of Nations. James Madison answered the question of the unregulated or freemarket in The Federalist #51, and I’ll paraphrase, “If men were angels any government or no government would work. I will remind you that economics is part of the political equation: it was called “political economy” until Alfred Marshall renamed it in the late 1880’s. All human endeavors, political, economic, and social, require an outside system of checks and balances to not become tyrannical to the weakest portion of the nation’s population. The “invisible hand” only works at a very local level, not on a national or international scale. Read Kenneth Lux’s “Adam Smith’s Mistake” for more on this subject.

It gets worse when you consider that the diluted deciding power of each voter actively promotes irrational voting at a systemic level. That is, Democracy destroys rational, self-interested decision-making in favor of arbitrary, irrational decision-making.

And obviously, in your great wisdom and experience, you understand this SO MUCH BETTER than people who have considered the issues for decades. We need you to go to Washington so you can jolly well tell them how to fix everything.

I was just stating the position of non-libertarians. I’m not saying that I am right and you are wrong. Just that there are people who have considered the issues for decades and that they have come to vastly different conclusions about what to do about it.

If you think they overestimate the beneficial effects of a free market, it’s because you’re confusing the overregulated, crony-dominated, and lobbyist-employing business sector the US has now with the free market or its supporters. They are its biggest enemies, not least because every new tax and regulatory burden falls more heavily on small business than on large.

Oh, and I totally agree with the discussion of MADD, but they are far from the only originally-good organization that has won its original goals, then continued on to seek senseless, absurd extensions of them. NOW and Greenpeace fit that description to a T. So do the US welfare and race-relations bureaucracies.

And the problem with liberalism is that they think all problems are solvable, if everyone would just wish hard enough – and then in the real world, that gets translated to enforcement by men with guns. There are problems that a free market won’t solve, but the initiation of force is far more likely to make worse problems.

Remember, it’s the powerful and wealthy that will control that force. It’s far better to build strict limits on governmental powers into the political system than to hope that maybe you get a “enlightened” people willing to work against their own self-interest in office.

Naturally, I had to google where Buchanan stood on the question of basic income (sometimes called “citizen’s dividend” or “demogrant”). He was for it if and only if it were combined with a flat tax and was utterly flat on the grant side (i.e., a poor person in the ghetto and Bill Gates would get exactly the same amount).

So “demogrant” is an idea which, in various forms, has been supported and/or endorsed by James Buchanon, Robert Reich, Milton Friedman, Martin Luther King, Jr., Sara Palin, Barack Obama, Republican governor of Alaska Jay Hammond (who set up a form in Alaska), Brazilian Senator Eduardo Suplicy (a founding member of the left-wing Brazilian Workers Party), and me. Maggie suggested that it would be better than the benefits system we use in America now.

This is either the best or worst idea in the history of politics and economics.

Thanks! James Buchanan did absolutely NOTHING after the 1860 election to prevent the Civil War, and he had three whole months. In my book, that’s worse than anything George W. Bush or Barack Obama did. Lincoln wouldn’t have had as nearly as tough a time in his administration if James Buchanan had bothered to take his oath to defend the Constitution seriously.

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